OSX 3 13% bondholders grant approval to share transfer, OGX settlement

By Wendy Van Sickle

Columbus, Ohio, Feb. 9 – The holders of OSX 3 Leasing BV’s 13% senior secured callable bonds 2012/2015 approved a share transfer and OGX settlement on Thursday, according to a notice from bond trustee Nordic Trustee ASA.

Enough bondholders were present to form a quorum, and 100% of the votes cast were in favor of the transfer and settlement.

As previously reported, the trustee said the ordinary shares in OSX 3, which are pledged in favor of the trustee on behalf of the bondholders, were held by OSX 3 Holding BV.

All of the shares in OSX 3 are expected to be acquired by OSX 3 Cayman Ltd. (Cayco) or a subsidiary. Cayco is an orphan entity established to issue new bonds in order to fund potential recoveries under the bond agreement.

Bondholders were asked to consent to the transfer of shares to Cayco.

According to a previous notice, OGX Petroleo e Gas SA has been extracting oil from a field in Brazil without payment of any charter rates to OSX 3 since October 2014. As of Dec. 31, OSX 3 was owed $213.5 million by OGX in unpaid charter rates.

In addition to the charter rates, the trustee said OGX and its substantial shareholder Oleo e Gas Participacoes SA owe substantial financial obligations to two other groups of creditors under a debtor-in-possession facility and an incremental facility. Those debts totaled $636.1 million as of Dec. 31.

Under the proposed settlement, the claims of OSX 3 and the DIP and incremental lenders will be satisfied in return for a total of 95% of the post-restructuring equity in OGX.

Also, the charter contract will be amended, and OGX will be allowed to use a floating production, storage and offloading unit at the field without further payment of charter rates, other than a portion of revenues above a monthly threshold.

OGX will be required to pay all insurance costs in connection with the FPSO, and OSX 3, the bond trustee or OGX may terminate the charter contract and require redelivery of the FPSO to OSX 3 on 240 days’ written notice.

The settlement also calls for the designation of some of OGX’s assets and revenues into an escrow account exclusively for the satisfaction of its obligation to disconnect the FPSO from the field, to redeliver it to OSX3 and for decommissioning liabilities associated with abandonment of the field.

The trustee said a governance structure will be established under the settlement to mitigate implementation and counterparty risks.

The bondholders were also asked to ratify the trustee’s hiring of FTI Consulting as its financial adviser.

OSX 3 Leasing is a subsidiary of OSX Brasil SA, a Rio de Janeiro-based oil and gas holding company.

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